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1. All Rite Co. has arranged a line of credit of $225,000 with an interest rate of 8.25 percent and a compensating balance requirement of 1.5 percent, which is based on the total amount borrowed. Assume the firm uses this source of funding to purchase a $167,000 piece of equipment and repays the loan in a lump sum at the end of one year. What is the effective interest rate?

2. Graser Trucking has $10 billion in assets, and its tax rate is 35%. Its basic earning power (BEP) ratio is 12%, and its return on assets (ROA) is 6%. What is its times-interest-earned (TIE) ratio? Round your answer to two decimal places.

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92835377

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